Company Application No. 182 of 2004
In the High Court at Calcutta
Original Jurisdiction
In the Matter of :
The Companies Act,
1956.
And
In the Matter of :
An application under Sections 391(1)
and 393 of the said Act.
And
In the Matter of :
Balagarh Power Company Limited, a Company incorporated under
the provisions of Companies Act, 1956, having its registered office at CESC
House, Chowringhee Square, Kolkata 700 001 in the State of West Bengal.
And
CESCON Limited, a Company incorporated under the provisions
of the Companies Act, 1956, having its registered office at CESC House,
Chowringhee Square, Kolkata 700 001, within the aforesaid jurisdiction.
And
CESC Limited, a Company incorporated under the provisions of
the Companies Act, 1956, having its registered office at CESC House,
Chowringhee Square, Kolkata 700 001, within the aforesaid jurisdiction.
1. Balagarh Power Company Limited
2. CESCON Limited
3. CESC Limited
….. Applicants.
STATEMENT UNDER SECTION 393 OF THE
COMPANIES ACT, 1956
The
accompanying notice has been sent convening a meeting of the Equity
Shareholders of CESC Limited, being the Applicant Company No.3 abovenamed
(hereinafter referred to as “CESC” or “the Transferee Company”) for the purpose
of considering, and, if thought fit, approving, with or without modification,
the proposed Scheme of Arrangement for amalgamation of Balagarh Power Company
Limited being the Applicant Company no. 1 abovenamed (hereinafter referred to
as “BPCL”) and CESCON Limited, being the Applicant Company no. 2 abovenamed
(hereinafter referred to as “CESCON”), (BPCL and CESCON hereinafter
collectively referred to as “the Transferor Companies”) with the Transferee
Company. The detailed terms of the Scheme will appear from the enclosed draft
of the Scheme of Arrangement.
BUSINESS
AND FINANCIAL POSITION OF THE TRANFEROR COMPANIES AND THE TRANSFEREE COMPANY :
A.
BPCL
(a)
BPCL was incorporated in 1994 for
the purpose of setting up a 2 x 250 MW
thermal power station at Balagarh near Kolkata.
(b)
BPCL’s accounts have
last been audited as at 31st March, 2003. The following summary is
extracted from the said accounts:
(Amount
in Rs. Lacs)
|
Paid-up
Share Capital |
5.00 |
|
Less
Miscellaneous Expenditure (to
the extent not written off or adjusted) |
1,59.61 |
|
Net
Negative Shareholders’ Fund |
1,54.61 |
|
Assets |
70,49.58 |
|
Liabilities |
72,04.19 |
|
Excess
of Liabilities over assets |
1,54.61 |
|
(c) |
The entire paid up share capital of
BPCL is now held by the Transferee Company and its nominees. BPCL has not issued any debentures. |
|
(d) |
Subsequent to the date of the
aforesaid audited accounts, there has been no material change in BPCL's financial position. |
B. CESCON :
|
(a) |
CESCON,
also a 100% subsidiary of the Transferee
Company, was set up in 1990 and has been engaged mainly in power consultancy
and contracting business. |
|
(b) |
CESCON's
accounts have last been audited as at 31st March, 2003. The following is a
summary extracted from the said audited accounts: |
(Amount in Rs. Lacs)
|
Paid-up Share
Capital |
1084 |
|
Add, Reserves &
Surplus |
99 |
|
|
1183 |
|
Less, Miscellaneous
expenditure to the extent not written off or adjusted |
4 |
|
Net Shareholders'
Funds |
1179 |
|
Assets |
1179 |
|
Liabilities |
0 |
|
Excess of Assets
over Liabilities |
1179 |
|
(c) |
The
entire paid up share capital of CESCON as aforesaid is held by the Transferee
Company and its nominees. CESCON has not issued any debentures. |
|
(d) |
Subsequent to the date of the
aforesaid audited accounts, there has been no substantial change in CESCON's
financial position, save and except that, some of its investments have been
disposed off at their respective realisable market values. |
C.
Transferee
Company :
|
(a) |
CESC, the Transferee Company, was incorporated
in 1978 and is engaged in the business of generation and distribution of
power in and around the city of Kolkata. CESCON and BPCL, the Transferor
Companies, are both wholly-owned subsidiaries of the Transferee Company. |
|
(b) |
The accounts of the Transferee
Company have last been audited as at 31 March, 2003. The following is a
summary extracted from the said accounts of the Transferee Company |
(Amount
in Rs. Lacs)
|
Paid-up share
Capital |
6172 |
|
Add, Reserves &
Surplus |
215615 |
|
|
221787 |
|
Less, Miscellaneous Expenditure to
the extent not written off or adjusted |
1127 |
|
|
220660 |
|
Less, Debit balance
in Profit & Loss Account |
40919 |
|
Net Shareholders'
Fund |
179741 |
|
Assets |
510673 |
|
Liabilities |
330932 |
|
Excess of Assets
over Liabilities |
179741 |
|
(c) |
The Transferee Company had issued
various debentures from time to time on which an aggregate sum of Rs. 17377
lacs was outstanding on 31 March 2003. |
|
(d) |
As per the
unaudited provisional results of the Transferee Company for nine months
period ended 31 December 2003, the estimated
net profit earned for the said period is Rs.53 Crore. |
REASONS FOR AMALGAMATION :
|
(a) |
CESCON
was incorporated in 1990 for undertaking consultancy and contracting business
in the power sector but, unfortunately, has not been able to generate
sufficient business to justify continuance of its separate corporate
existence. Further, the new Electricity Act 2003 effective from June last
year giving a completely new direction to the power sector has made CESCON's
future more uncertain. In this backdrop, it is proposed to merge CESCON with
the Transferee Company, subject to receipt of necessary approvals. |
|
(b) |
As
stated hereinbefore, BPCL had been incorporated in 1994 to set up a 2 x 250
MW thermal power plant at Balagarh near Kolkata. However, due to various
adverse developments, the prospective lenders and equity partners of BPCL
decided to pull out of the project leaving BPCL with no option but to shelve
the project. As there is no plan to pursue the aforesaid project through
BPCL, it is considered that no useful purpose will be served by continuing
BPCL's separate corporate existence. Hence, it is proposed to merge BPCL with
the Transferee Company through the Scheme, subject to receipt of necessary
approvals. |
|
(c) |
The entire shares
of the Transferor Companies are held by the Transferee Company and/or their
respective nominees. As such,
the Transferee Company will not be required to issue any share in terms of
the Scheme. |
|
(d) |
The
Scheme will result in reduction of overheads and other expenses, reduction in
administrative and procedural work, better and more productive utilisation of
resources, enable the Transferee Company to effect internal economies and
will lead to greater overall efficiency in operation. |
SALIENT FEATURES OF THE SCHEME :
|
(a) |
The
Scheme is conditional upon and subject to approval being accorded thereto by
the requisite majority of members of the Transferee Company and the same
being sanctioned by the Hon'ble High Court at Calcutta. The Scheme has,
already been approved by the shareholders of CESCON and BPCL, the Transferor
Companies, whose shares are entirely held by the Transferee Company and its
nominees. Although the Scheme shall be operative from the Appointed Date i.e.
31 March 2004, it shall become effective on the Effective Date, being the
date on which the certified copy of the Order of the Hon'ble High Court at
Calcutta sanctioning the Scheme is filed by the Transferor Companies and the
Transferee Company with the Registrar of Companies at Kolkata. |
|
(b) |
With
effect from the aforesaid Appointed Date, the Transferor Companies shall
stand amalgamated with the Transferee Company and the undertakings of the
Transferor Companies including all their assets, rights, licences, powers,
etc., as well as all its outstanding liabilities, duties and obligations
shall be transferred to and vested in the Transferee Company. |
|
(c) |
All
the employees of the Transferor Companies in service on the Effective Date
shall on and from the Effective Date become the employees of the Transferee Company
on the terms and conditions on which they were engaged by the Transferor
Companies without treating it as a break or discontinuance or interruption in
service. |
|
(d) |
All proceedings pending by or against
the Transferor Companies, all contracts, obligations, actions, rights and
claims by or against the Transferor Companies will be transferred to the
Transferee Company and will be enforceable by or against the Transferee
Company. |
|
(e) |
All Equity Shares held by the
Transferee Company in the Share Capital of the Transferor Companies shall
stand cancelled. |
|
(f) |
With
effect from the Appointed Date and up to the Effective Date : |
|
i. |
The
Transferor Companies shall carry on and be deemed to have carried on all its business
and activities and shall hold and stand possessed of and be deemed to have
held and stood possessed of all its assets for and on account of and in trust
for the Transferee Company. |
|
ii. |
The
Transferor Companies shall carry on its business and activities with due
diligence and business prudence and shall not charge, mortgage, encumber or
otherwise deal with its assets or any part thereof, nor incur, accept or
acknowledge any debt, obligation or any liability or incur any major
expenditure, except as is necessary in the ordinary course of its business,
without the prior written consent of the Transferee Company. |
|
iii. |
All profits
or income accruing or arising to the Transferor Companies or expenditure or
losses arising or incurred by
the Transferor Companies shall for all purposes be deemed to have accrued as
the profits or income or expenditure or losses, as the case may be, of the
Transferee Company. |
|
The Board of Directors
of the Transferor Companies have at their respective meetings by resolutions
approved the Scheme. |
|
The aggregate
assets of the Transferor Companies and the Transferee Company are more than
sufficient to meet all their
liabilities and the Scheme will not adversely affect the rights of any of the
creditors of the said Companies in any manner whatsoever and due provisions
have been made for payment of all liabilities as and when the same fall due
in usual course. |
|
There are no proceedings pending
under Sections 235 to 251 of the Companies Act, 1956 against the Transferor
Companies or the Transferee Company. |
|
There shall be no change in the
capital structure and shareholding pattern of the Transferee Company consequent
to the aforesaid amalgamation of the Transferor Companies with the Transferee
Company inasmuch as the Transferee Company will not be required to issue any
share consequent to the aforesaid Scheme. |
|
Mr. S. Banerjee, a Director of BPCL
is the Managing Director of the Transferee Company. Mr. P.B.Ghosh, a Director
of CESCON is also a Director of the Transferee Company and holds 560 Equity
Shares therein. |
|
Mr. R.P.Goenka and Mr. Sanjiv Goenka,
Chairman and Vice Chairman respectively of the Transferee Company, holds
26,400 and 1,20,194 Equity Shares respectively in the Transferee Company. |
|
Save as mentioned above, none of the
aforesaid directors or any other director of any of the Applicant Companies
hold any shares in any of the Applicant Companies. Save as aforesaid, none of
the directors of any of the Applicant Companies have any material interest in
the proposed Scheme. |
|
CAPITAL STRUCTURE AND SHAREHOLDING
PATTERN OF THE TRANSFEREE COMPANY AS ON 31 DECEMBER, 2003 : |
(A) Capital Structure :
Paid-up Share Capital
Rs. lacs
|
(i) |
6,59,68,754
fully paid Equity Shares of Rs. 10/- each (net
of calls unpaid Rs.96,000/-) , |
6596 |
|
(ii) |
1,89,548
Equity Shares of Rs. 10/- each paid up
to the extent of Rs. 5/- per share |
9 |
|
(iii) |
50,00,000 16%
Cumulative Redeemable Preference Shares of Rs. 10/- each fully paid up
out of which an amount at the rate of Rs.3.33 per share has
since been redeemed (these shares have since been fully
redeemed); and |
333 |
|
(iv) |
Forfeited
Shares. |
64 |
|
|
TOTAL |
7002* |
(* Note: The total paid up Share Capital, as
of date, is Rs.6669 lacs consequent to the full redemption of the
aforesaid Preference Shares)
B) Equity Shareholding pattern :
|
Category |
No. of Equity Shares |
Percentage |
|
|
(1) |
Promoters |
27437362 |
41.47 |
|
(2) |
Institutional
investors, Mutual Funds and UTI |
550889 |
0.83 |
|
(3) |
Banks, Financial
Institutions, Insurance Companies |
9534369 |
14.41 |
|
(4) |
Foreign Institutional
Investors (FII) |
7556047 |
11.42 |
|
(5) |
Private Corporate
Bodies |
7183251 |
10.86 |
|
(6) |
Indian Public |
9778808 |
14.78 |
|
(7) |
Non Resident
Indians (NRls) / OCBs |
3504600 |
5.30 |
|
(8) |
Any Other |
612976 |
0.93 |
|
|
GRAND TOTAL |
66158302 |
100.00 |
Note:
There shall be no change in the capital structure and shareholding pattern of
the Transferee Company consequent to amalgamation in as much as the Transferee Company
will not be required to issue any Equity Share.
Copies of the following documents are open for inspection at
the registered office of the Transferee Company between 11.00 A.M. and 1.00
P.M. on any working day :-
(a) Memorandum & Articles of Association of the
Applicant Companies;
(b) Annual Reports and Accounts of the Applicant Companies
for the financial year ended on 31st March, 2003;
(c) Register of Directors' Shareholdings of the Applicant
Companies.
Drawn
by:
For
Khaitan & Co.
Sd/-
(A
K Jhunjhunwala)
Advocates
for Applicants
1B,
Old Post Office Street Kolkata 700 001
|
Settled by : |
|
Resettled
by : |
|
Sd/- (Anjan Kumar Mitra) |
|
Sd/-
(Anjan Kumar Mitra) |
|
15.03.2004 |
|
23.03.2004 |
|
Assistant Registrar (Company) |
|